IMF Staff Concludes Visit to Jordan
At the end of the visit, Mr. Cerisola issued the following statement:
“This was my first visit to Jordan as new IMF mission chief and I am grateful to the Jordanian authorities for their warm hospitality and productive discussions. The IMF team met with Prime Minister Ensour, Minister of Finance Malhas, Governor Fariz, Minister of Planning Fakhoury, and other senior government officials. The team also met with members of parliament, and with representatives of the banking and private sectors, and from the donor community. Discussions focused on recent economic developments and government’s economic policy and reform agenda to sustain macroeconomic stability and boost economic growth and reduce unemployment.
“Jordan’s economy has continued to perform favorably despite the difficult regional environment. The conflicts in Iraq and Syria continue to impinge upon exports, tourism, and overall economic performance. Real GDP growth reached 2.4 percent in 2015, while inflation was -0.9 percent, owing to a decline in food and fuel-related prices, with core inflation stabilizing at 2 percent. The current account deficit (excluding grants) reached 11.7 percent of GDP in 2015, reflecting continued weakness in exports and tourism. International reserves remain adequate. Despite lower oil prices, some revenue slippages and one-off expenditures by end-year have brought the primary government deficit (excluding grants and transfers to NEPCO and WAJ) to 5.2 percent of GDP in 2015, up from 4.5 percent of GDP in 2014. With the electricity company NEPCO continuing to make steady progress toward operating balance, the combined deficit of the central government and NEPCO reached 6.1 percent of GDP in 2015, above the 3.5 percent of GDP deficit projected under the SBA. As a result, government gross and net public debt stood at 93.4 and 85.8 percent of GDP at end-2015, respectively. For 2016, real GDP growth is expected at 2.5–3 percent, supported by low oil prices and some rebound in confidence related to the implementation of policies under the Jordan Compact and Response Plan. There are some downside risks from the regional implications of lower oil prices on Jordan’s remittances and foreign investment, while the expected relaxation of EU rules of origin could boost exports, growth and employment ahead. Inflation is projected at 1–1.5 percent, as fuel prices stabilize.
“Regarding policies and reforms for 2016 and beyond, the discussions focused on how to continue striking the delicate balance between sustaining fiscal consolidation and debt sustainability, with the need to implement policies and reforms to support economic growth and promote employment in a difficult economic and regional context. The IMF team and the authorities discussed the potential for policies and reforms in areas such as fiscal policy, debt management, energy, access to credit and the financial sector, as well as the business environment. Discussions also focused on the prospects for additional financing (including grants) from donors and international financial organizations under the Jordan Compact and Response Plan and on how such additional financing should fit within an overall macroeconomic framework that preserves debt sustainability.
“Discussions are expected to continue during the Spring Meetings in Washington DC, and the IMF team would expect to return to Amman in May to continue the discussions toward an agreement on macroeconomic policies and comprehensive structural reforms under a Fund-supported program.”